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Senate Passes Bill to Regulate Transportation Network Companies

June 29, 2016

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Today, the Massachusetts Senate passed legislation to regulate Transportation Network Companies (TNCs), including Uber and Lyft. The bill, S.2371 An Act regulating Transportation Network Companies, creates a strong regulatory framework for operatives and drivers to be administered by the Department of Public Utilities (DPU). It would also subject drivers to strict background checks, set rules for insurance requirements and require drivers to be certified.

“Massachusetts is a hub of innovation and entrepreneurship, and we want to foster an environment where great ideas and new technologies can flourish,” said Senate Committee on Ways and Means Chair Senator Karen E. Spilka (D-Ashland). “Transportation network companies use innovative technology to provide a useful service, yet they currently operate without any municipal or state oversight to ensure public safety and consumer protection. This bill takes decisive action to oversee and regulate these companies, while allowing them to continue to thrive and innovate here in Massachusetts.”

Under the Senate model of shared leadership, a working group was formed to examine the issues surrounding TNC regulation, led by Senate Committee on Ways and Means Chair Karen Spilka (D-Ashland) and Senate Chair of the Joint Committee on Financial Services Senator Jamie Eldridge (D-Acton) and including Senator William Brownsberger (D-Belmont), Senator Linda Dorcena Forry (D-Dorchester) and Vice-Chair of the Joint Committee on Financial Services Senator Eric Lesser (D-Longmeadow).

Over the past few months, the working group met with a range of stakeholders on this issue including TNCs, taxi drivers, taxi medallion owners, the livery industry, the Division of Insurance, municipal leaders, insurance companies and the Department of Criminal Justice Information Systems.

Under the bill, the state and the TNC must both verify that each driver has successfully completed a background check. A driver must be at least 21 years old and his or her name must not appear on the National Sex Offender Registry. The driver must not have been convicted of certain crimes in the past seven years and no more than 5 traffic violations or any major traffic violation in the past 3 years. The DPU will be required to issue TNC-specific decals that drivers will be required to place on their vehicles for identification purposes. The bill also includes steep penalties of up to $1,000 for willfully permitting an uncertified driver to use a certificate that does not belong to them.

The legislation increases consumer protection and ensures that the industry is transparent and accountable. Under the bill, a TNC must provide accurate fare estimates, prohibit fare increases during emergencies and require accommodation of riders with special needs. It also requires a TNC to set up a toll-free customer service hotline on their app and website to better meet the needs and concerns of consumers.

The bill establishes a trust fund that will provide cities and towns with funds at least annually based on the proportion of rides originating in those cities and towns. These funds may be used for anything related to unmet transportation needs. It is funded by a marginal 10-cent charge on each TNC ride in the Commonwealth.

A conference committee will now be tasked with resolving the differences between the Senate and House versions of the bill.